The present invention relates generally to a computerized mortgage system and process that permit potential borrowers to customize mortgage loans to meet their changing needs and different financial goals.
When considering the purchase or refinance of a home, potential home buyers consult mortgage lenders such as mortgage companies, savings and loans institutions, credit unions, state and local housing finance agencies or the like to obtain the finds necessary to purchase or refinance their homes. These lenders, who make (originate and fund) mortgage loans directly to home buyers, comprise the “primary mortgage market.”
When a mortgage is made in the primary mortgage market, the lender has several options which include: (i) holding the loan as an investment in its portfolio; (ii) selling the loan to investors in the “secondary mortgage market” (which includes government-sponsored entities, pension finds, insurance companies, securities dealers, financial institutions and various other investors) to replenish its supply of finds; or (iii) packaging the loan with other loans and exchanging them for securities like mortgage backed securities which provide lenders with a liquid asset to hold or sell to the secondary market. By choosing to sell its mortgage loans to the secondary mortgage market, or by selling the mortgage backed securities, lenders get a new supply of funds to make more home mortgage loans, thereby assuring home buyers a continual supply of mortgage credit.
A secondary mortgage market purchaser finances the loans and mortgage backed securities it buys for its own mortgage portfolio by the sale of debt securities in the global capital markets. Working with investment banks, the purchaser sells its debt to both domestic and international investors such as central banks, pension funds, investment funds, commercial banks and insurance companies.
Lenders compete in the primary mortgage market by offering and advertising various mortgage products typically having predetermined or “pre-packaged” features. This “one-size-fits-all” approach to mortgage loans has been both a source of missed opportunities for lenders and discouragement for borrowers.